February 24, 2011

CMS: Facilities Paid in Excess of $100 Million May See Larger Number of Additional Documentation Requests

By

ernieAdditional Documentation Request (ADR) limits for the Recovery Audit Contractor (RAC) program have been set by The Centers for Medicare and Medicaid Services (CMS) for all Medicare providers, including a change to the number of additional documentation requests a RAC can make per 45-day period of any hospital or other type of medical facility.

Basically, the RACs are using almost the same rule as last year, but the new mandate provides a cap that no longer is based on a facility’s claims volume. The new cap, regardless of claims volume, is 300 records.


However, we’ve received word that a hospital in Region A recently received a letter from its RAC stating that their cap was raised to 500 records per 45-day period. The letter apparently indicates that CMS has determined that facilities with DRG payments in excess of $100 million during the last fiscal year have  the ability to address a larger number of additional documental requests.

Evidently, then, dollar volume could be factored into the cap at the discretion of CMS. According to a statement from CMS, however, to date this only has been done for a small number of facilities.

FY2011 ADR Limits for Facilities


Previously, all caps or limitations were defined by rules established by CMS for institutions (facilities), physician and non-physician practitioners, and for Durable Medical Equipment (DME) suppliers. Each rule is available via separate PDF files on the CMS RAC Updates Web page.

The following three stipulations mirror the FY 2010 rules for institutions:

 

  • Limits will be set at 1 percent of all claims submitted for the previous calendar year, divided into eight periods (45 days).


  • While respecting a provider’s overall limit, the RAC may exercise discretion in the exact composition of an additional documentation request. For example, the RAC may request inpatient records up to the full limit even though the provider’s inpatient business may only be a small portion of their total claim volume.


The final stipulation states that RACs can exceed the cap in cases in which either CMS or a RAC has a reason to exceed it, as long as CMS approves the increase:

 

  • In addition, CMS may give the RACs permission to exceed the cap. Permission to exceed the cap must receive CMS approval and may occur by CMS or by the RAC requesting permission to exceed the cap. Affected providers will be notified in writing.

 

Listed just before that is the stipulation not seen in previous years’ rules: an ultimate cap of 300 records. This is a significant decrease in the cap limit for larger hospitals:

 

  • Beginning November 2, 2010, the cap will be 300 additional documentation requests per 45 days for all providers (excluding physicians and suppliers).


How to Interpret the Rule and the letter?

So we have now two conclusions:

 

  • The overall cap for facilities (since November 2, 2010) is 300 ADRs, regardless of the number of claims filed the previous year. (That is, calculate the 1 percent figure as before, but use the lesser of that or 300.)

  • Regardless of the cap, if a facility has payments from Medicare in excess of $100 million for the previous fiscal year, CMS just might increase the cap for that facility.


There may or may not be a set formula that CMS will use to calculate a new cap for a facility, but in a written response to RACMonitor, Connie Leonard, RAC project manager for CMS, stated that “we have chosen to do this in a very small number of facilities.”

About the Author

Ernie de los Santos is the chief information officer for eduTrax®. He joined the company at its inception and has been responsible for the creation, development and maintenance of the eduTrax® portals — a set of Web site devoted to providing knowledge, resources and compliance aids for U.S. healthcare professionals who are involved in revenue cycle management.

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ernie@edutrax.net

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